Homework Answers
Estimated net income = $6,000
Tax rate = 40%
Income before tax (Operating income) = Estimated net income/(1 - tax rate)
= 6,000/(1 - 0.4)
= 6,000/0.6
= $10,000
Estimated operating income for the month is between 0 to $20,000
Correct option is (a)
Total variable costs = $40,000
Contribution margin percentage = 50%
Since Contribution margin percentage is 50%, hence Total variable costs must be 50% of sales. (Since sum of Contribution margin percentage and total variable costs as a percentage of sales is 100%)
Total variable costs = 50% of sales
40,000 = Sales x 50%
Sales = 40,000/50%
= $80,000
Estimated sales revenue for the coming month is between $60,000 to $80,001
Correct option is (d)
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